Ukraine - Selling and buying

Reaching the consumers

Marketing opportunities

Consumer behavior: The price factor has most value for Ukrainian consumers. In addition, they are greatly attracted by western products, which are of higher quality than national products, and are often difficult to obtain in the hinterland. The quality of after-sales service is a criterion which can set a foreign company apart, for in Ukraine shops very rarely exchange defective goods, and for this reason consumers have a very poor image of this aspect of sales in the country.

Consumer profile: A household's average income is estimated at 4EUR 50, and 90% of the average Ukrainian's budget is devoted to primary expenses (food and housing). The middle class, in the western sense of the term, represents about 9% of the population, and its number is growing at the same time as the country's economy; it is strongly attracted by western products. A large proportion of the popular classes also identifies with the middle class, since a third of the population feels it belongs to this group. Most Ukrainian consumers belong to the 35-49 age bracket, and to the 10-20 one. This latter category stands out for its greater consumption of western products, while the former contribute most to the real estate and ready-to-wear markets.

Distribution network

Evolution of the sector: Few structures carry out distribution and the follow-up of imports. The distribution sector remains very traditional and fragmented, but the arrival of foreign competitors could widen the range of products and services, contribute to stabilizing prices and stimulate competition. Franchises are growing, but there is a legal vacuum as far as intellectual property is concerned, and barriers to the development of small companies.

The most developed distribution circuit is retail trade. Food shops can either be non-specialized or specialized in a single range of products. There are also department stores especially in Kiev such as the Department Store Ukraine, the Zum which is the equivalent of Printemps in Paris (Selfridge's in London), the department toy store, Dytiachy Syit - Children's World, the large jeweler's Koschtan, and for perfume and cosmetics, Lancôme.

The market share of non-organized retail is increasingly encroached upon.

Types of outlet: Non-organized retail shops have 43% of the market, local shops control 25%, while supermarkets have approximately 12% market share.

Market access procedures

Economic Cooperation: Ukraine is member of WTO since 2008.

Non tariff barriers: The only important barrier to trade and investment in Ukraine is the country's difficulty in transiting from a planned economy to a market economy. Following economic reforms, the country experienced a relative success concerning export and investment.

There are real structural barriers putting a brake on trade and investment in Ukraine : corruption, lack of protection in terms of intellectual or industrial property, lack of foreign exchange, an ill defined or too bureaucratic hierarchy, an inefficient and little developed banking system, law, license and tariff changes... Investment is precisely curbed by the absence of private property and a coherent privatization program, non convertibility of the country's currency and lack of financial liquidity, change of legislation relating to investment, lack of quality, lack of competitive prices for hiring or purchasing representative offices, poor infrastructures, political instability...

Average Customs Duty (excluding agricultural products): Average customs duties are between 10 and 15%.

Customs classification: Ukrainian customs follow the recommendations of the WTO and apply the Harmonized System.

Import procedures: The import duties to be paid by a foreign importer in Ukraine vary according to the type of product: alcohol, tobacco, motor cars, tires, jewelry and other luxury products. The payment of these duties must be effected in the country's currency. Excise duties are also paid in the local currency and are calculated as follows: for non luxury products, a percentage is applied and for luxury products the excise duty is not calculated on the customs declared value but according to volume, number of units or weight of the import.